Notes

In The Atlantic’s May issue, Neal Gabler explores his own financial troubles for clues as to why so many Americans are struggling to remain financially solvent. We reached out to some of the leading scholars of the American middle class to ask what they make of Gabler’s analysis, and their responses are compiled here. (We also have a popular ongoing series of readers telling their own stories of financial woe.)

The debate around our cover story and middle-class money continues. Damon Jones, a professor the at University of Chicago Harris School of Public Policy, adds that saving for retirement is a different process than in generations past:

One of the most important financial decisions we face is saving for retirement. Over the last three decades, there has been a massive shift in how private-sector workers save for the future. Today, more workers than ever before are relying on retirement plans that depend on their personal investment choices and stock-market performance, as opposed to plans that have a guaranteed pay out built in.

In 1980, 62 percent of workers with retirement plans had only a defined benefit plan. These are the traditional pensions of our grandparents’ era: they promise a stream of income at retirement, based on a worker’s earnings and years of service with an employer. Meanwhile, only 7 percent of workers relied solely on a defined contribution plan. A defined contribution plan, such as a 401(k), pays out based on how much the worker and employer each contribute, as well as how the investment fares on the stock market. By 2011, these numbers had essentially reversed: 69 percent of workers enrolled in a defined contribution plan, and only 7 percent in a defined benefit plan.

While both plans involve risk, defined contribution plans arguably shift more risk onto employees. Defined benefit plans are insured by the federal government and are typically paid out in an annuity, guaranteeing a fixed payment over the rest of one’s life. In contrast, defined contribution plans are more susceptible to the throes of financial market swings and are more easily cashed out in a lump sum at retirement, leaving workers exposed to the risk of outliving their wealth. And while defined contribution plans provide personal control, this presents more opportunities for investors to miss out—many plans require active enrollment and active transferring of funds when changing employers. While retirement plans do not tell the whole story, they play a role in determining American’s financial security.

Note: Defined benefit and defined contribution participation rates from the Employment Benefit Research Institutes tabulations of US Department of Labor statistics.

Mary Pattillo, a professor of sociology and African American studies at Northwestern, points to the decline in public-sector jobs and unions to help explain the financial distress Gabler chronicles:

“An injury to one is an injury to all.” We have traveled so far away from that classic labor-movement slogan that the widespread inability to cover a $400 unexpected expense is suffered in silence and shame. Gabler narrates the story of stagnant wages and insecure employment but fails to name two important and related contributing factors to these realities: the assaults on public-sector employment and declines in unionization rates.

The share of workers in the public sector is at its lowest since 1966, and unionization rates have been on a relatively continuous decline since the 1950s, with current rates at 11 percent. There is strong evidence that public-sector employment offers greater job security and that unions beget higher wages.

The decline in both helps us understand why so many people are struggling and why the prevailing explanations are so individualistic: Credit cards are about us and our debt; we have only ourselves to blame.

This kind of thinking crowds out the more empathetic and collective ethos that sustains unions and a commitment to civil-service work. And, slowly, political and economic decisions that produce jobs that barely ensure subsistence become the personal burden of “financial impotence.”

Paige Marta Skiba, a law professor at Vanderbilt Law School, responds to our May cover story on shrinking middle-class wealth:

The problem is not just high interest credit cards. In the last two decades, Americans have experienced a meteoric rise of alternative financial services like payday loans, installment loans and auto-title loans. As an economist, I’d like to think this increase in choice of credit products is a good thing, especially for your typical borrower—a middle-class worker without savings or many traditional options for borrowing after a few credit hiccups.

But because we forget to pay on time, we procrastinate and we fail to predict the predictable shocks to our budget, more credit options can mean more trouble.

Lenders knowledgeable about behavioral economics craft loan terms that take advantage of the inveterate biases that cause nearly all of us to make financial mistakes. In addition, technological advances in the last twenty years have enabled lenders to easily screen for acceptable applicants at lightning speed and to experiment to perfect their underwriting rules. Lenders can now offer a variety of alternative financial products to their diverse customer base and are able to quickly adapt to changes in demand or the political landscape.

Regulators have failed to keep pace with these trends. For example, the Consumer Financial Protection Bureau publicly vowed to restrict payday lending practices numerous times, including this week, but has yet to enact any payday regulation. This lag has given lenders plenty of time to scale back their payday operations and turn their business focus to other (less transparent and even more expensive) loans that are not the subject of much regulation. Changes in credit card markets may have started us down the road to a shrinking middle class, but our own cognitive biases, lenders’ savvy and regulators’ slow reaction time are big parts of the story, too.

Dedrick Asante-Muhammad, the director of the Racial Wealth Divide Project at the Corporation for Enterprise Development (CFED), read our May cover story and submits that the inaccessibility of financial prosperity may only come as a shock to white Americans:

The secret is out: The American Dream of a secure “middle-class lifestyle” with a clear path to better future economic prospects is a too distant reality for most Americans. For white, middle-class households, this is a shock; financial security was considered their right.

But over the last 40 years, private market forces have stagnated wages, concentrated wealth, made a norm of what was formerly banned as predatory lending rates, and radically increased the cost of child care, health care and more. Yet, for most households of color—who will soon comprise the majority—this inability to realize the American Dream is no secret.

For people of color—whose median wealth is usually not even a tenth of that of white households and whose unemployment rates can be double those of white Americans—the economic insecurity causing populist anger among white Americans has been the accepted norm. To tackle this challenge, America, as it has done in the past, must invest in greater economic opportunity for its citizens and develop regulatory structures and tax policies that reward all. Amidst this ongoing financial insecurity crisis, there is an opportunity to create the first American middle class to be truly racially and ethnically inclusive.

In The Atlantic’s May issue, Neal Gabler explores his own financial troubles for clues as to why so many Americans are struggling to remain financially solvent.

When Rachel Schneider, the senior vice president at the Center for Financial Services Innovation, readthe cover story, she thought that one piece of the story was missing: volatility. She explains:

Neal Gabler’s beautiful and brave exploration of his financial life captures many of the reasons that millions of Americans live precarious financial lives: stagnating wages, the rising costs of a middle class life, and an overreliance on debt to fund the gap. But, there is another, more hidden cause of financial insecurity: volatility. In the U.S. Financial Diaries project, Jonathan Morduch and I found that, on average, households in our sample experienced more than 5 months a year in which their income was 25 percent more or 25 percent less than the average. The same was true for spending.

That means that even families who earn enough over the course of the year to cover their expenses often find themselves short this month or this week. The rent may be due Tuesday, groceries need to be bought now, but the paycheck isn’t coming until next Friday. It costs time, money, and energy to bridge those gaps. Better ways to plan, save, borrow, and insure can help even out the spikes and dips, but the financial advice and products of the past often assumed a baseline of cash flow stability. We will need to revise that assumption if we want to build supports for the future of financial health.

We reached out to some of the leading scholars of the American middle class to ask what they make of Neal Gabler’s analysis in our new cover story on financial insecurity. Our first contributor is Edward Wolff, an NYU professor of economics, who points to wage stagnation as the central factor:

The ultimate culprit is wage stagnation, occurring now for over 40 years (average real wages peaked in 1973). This translates into income stagnation. For a while (until about 1990 or so) families compensated for stagnant wages by the increased participation of wives in the labor force. Once this opportunity was exhausted real incomes also stagnated. Indeed, according to Census data, median family income in 2013 was less than it was in 1997.

As a result, over the last 20 years families have been forced to borrow in order to maintain their usual consumption. This process was aided by a generous expansion of credit, particularly through the home mortgage market. Largely abetted by a huge Chinese trade surplus and their consequent purchase of U.S. Treasury bonds, U.S. banks and other financial institutions were awash in cash. Enabled by lax mortgage regulation and rising home prices, financial institutions allowed generous re-financing of existing mortgages, expanded home equity credit lines, and issued a host of new types of mortgages including sub-prime, no or little down payment, and even no documentation loans. The result was a huge leap in household debt, particularly among the middle class (the debt-income ratio more than doubled between 1983 and 2007).

The result has been a catastrophic collapse of the wealth of middle-income and lower-income households. Median net worth plummeted by 44 percent between 2007 and 2013 for middle income families, 61 percent for lower middle income families by, and by 70 percent for low income families. The collapse of wealth is one of the principal factors leading to rising economic insecurity.

As winters grow warmer in North America, thirsty ticks are on the move.

We found the moose calf half an hour in. He lay atop thin snow on a gentle slope sheltered by the boughs of a big, black spruce, curled up as a dog would on a couch. He had turned his long, gaunt head to rest against his side and closed his eyes. He might have been sleeping. The day before, April 17, 2018, when the GPS tracker on the moose’s collar stopped moving for six hours, this stillness had caused both an email and a text to alert Jake Debow, a Vermont state field biologist who stood next to me now with Josh Blouin, another state biologist, that moose No. 75 had either shucked his collar or died.

“You want pictures before we start?” Debow asked me. He’s the senior of the two young biologists, both still in grad school, both in their late 20s, young and strong and funny, from families long in the north country, both drawn to the job by a love of hunting and being outside. Debow had always wanted to be a game warden; in college, he “fell in love with the science.” His Vermont roots go back 10 generations. “Jake Debow,” Josh told me, “is about as Vermont as you can get.” It was Debow’s second season on the moose project, and Blouin’s first. This was the sixth calf, of 30 collared, that they’d found sucked to death by ticks this season. They were here to necropsy the carcass, send the tissues to a veterinary pathology lab in New Hampshire, and try to figure out as much as possible about how and why these calves were dying.

The Bulwark is on a mission to name and shame President Trump’s most high-status supporters.

Charlie Sykes is sitting behind a desk in a sparse, disheveled office—blank walls lined with empty filing cabinets, windows covered with crooked blinds—as he tries to conjure the perfect metaphor for The Bulwark, the anti–Donald Trump conservative news site he recently helped start.

“We are the ultimate wilderness!” he declares to me.

But that doesn’t sound quite lonely enough for the political niche they’re occupying, so he tries again: “We’re on a desert island.”

Sykes continues to riff like this in his chirpy, midwestern accent, comparing The Bulwark’s writers to a band of “Somali pirates,” and then to a contingent of “guerrilla fighters.” He’s so enthusiastic about the exercise that before long I am tossing out my own overwrought suggestions. Perhaps, I muse at one point, they are soldiers on the final front of the Republican Civil War—making one last stand before the forces of Trumpism complete their conquest.

For several months, Cara has been working up the courage to approach her mom about what she saw on Instagram. Not long ago, the 11-year-old—who, like all the other kids in this story, is referred to by a pseudonym—discovered that her mom had been posting photos of her, without prior approval, for much of her life. “I’ve wanted to bring it up. It’s weird seeing myself up there, and sometimes there’s pics I don’t like of myself,” she said.

Like most other modern kids, Cara grew up immersed in social media. Facebook, Twitter, and YouTube were all founded before she was born; Instagram has been around since she was a toddler. While many kids may not yet have accounts themselves, their parents, schools, sports teams, and organizations have been curating an online presence for them since birth. The shock of realizing that details about your life—or, in some cases, an entire narrative of it—have been shared online without your consent or knowledge has become a pivotal experience in the lives of many young teens and tweens.

“Intuitive eating” encourages people to eat whatever they want. It might be great advice.

In 2016, Molly Bahr changed her whole life with a Google search. Bahr, a therapist, was at a professional training on eating disorders when a speaker mentioned in passing that participants might be interested in something called intuitive eating. Bahr looked up the term. “I went home that day, and it was like a light switch,” she says. “I felt like I got hit by a truck.”

Bahr decided she wanted to spread the word about intuitive eating, but there was one problem. Up to that moment, she had been dedicated to traditional ideas of dieting and health, encouraging followers on her growing fitness-focused Instagram account to weigh their food, watch their nutritional macros, and fret over their weight as a primary indicator of their health. Intuitive eating, on the other hand, is a theory that posits the opposite: Calorie-counting, carb-avoiding, and waistline-measuring are not only making people emotionally miserable, but contributing to many of the health problems previously attributed to simple over-eating.

A significant minority seldom or never meet people from another race, and they prize sameness, not difference.

Most Americans do not live in a totalizing bubble. They regularly encounter people of different races, ideologies, and religions. For the most part, they view these interactions as positive, or at least neutral.

Yet according to a new study by the Public Religion Research Institute (PRRI) and The Atlantic, a significant minority of Americans do not live this way. They seldom or never meet people of another race. They dislike interacting with people who don’t share their political beliefs. And when they imagine the life they want for their children, they prize sameness, not difference. Education and geography seemed to make a big difference in how people think about these issues, and in some cases, so did age.

Though it was clear long before this week’s hearings that there was serious fraud in the Ninth District, testimony produced a series of astonishing disclosures.

The decision came after a dramatic day, during a dramatic hearing, in a dramatic race. North Carolina election officials on Thursday ordered a new election in the state’s fraud-tainted Ninth Congressional District, the only 2018 U.S. House race that still doesn’t have a winner.

The contest between Republican Mark Harris and Democrat Dan McCready appeared to have been decided, albeit by a small margin, in Harris’s favor on election night. Now voters will remain without congressional representation until a new election can be held, following shocking revelations of a brazen scheme to break the law and swing the election using absentee ballots.

The hearing, originally scheduled to last one day, was well into its fourth when Harris abruptly called for a new election. “Through the testimony I’ve listened to over the past three days I believe a new election should be called,” he said. “It has become clear to me that the public’s confidence in the Ninth-District seat general election has been undermined to an extent that a new election is warranted.”

Can Roma nab Best Picture? Will A Star Is Born be snubbed? Here are The Atlantic’s predictions for the 91st Academy Awards.

However dramatic Sunday’s Academy Awards presentation might prove to be (safe prediction: not very), it will be all but impossible for the ceremony to match the turmoil of its run-up. Last summer, the Academy announced that it would add a new prize for “popular” film—a trulyterrible idea—only to reverse itself within a month. In December, days after being announced as the host, Kevin Hart stepped down after furor erupted over a series of nearly decade-old homophobic tweets and jokes. (Prepare yourselves: The last time the ceremony went without a host, in 1989, is widely considered the worst Oscars ever.) Then word came out that, to streamline the broadcast, the Academy would feature renditions of only two of the nominees for Best Original Song, and would present some significant technical awards, including Best Cinematography, during commercial breaks. Both plans were also quickly reversed.

The failed attempt to bring Amazon’s second headquarters to New York was a debacle, exposing a rift among progressives so large that it occupied half of last Sunday’s Meet the Press broadcast. When a local economic-development deal garners that kind of national press attention—when the head of the DNC is grilled about it by Chuck Todd—it is clear that this is about much more than local tax policy and a helipad.

I offered conditional support for Amazon’s arrival in New York when the deal was announced in November, while acknowledging the need to fix the deal’s problems. I was immediately labeled by the denizens of Twitter “a corporate shill,” “paid by Bezos,” or, my personal favorite, “a writer from Breitbart.” So convinced are some of my fellow progressives of their own rectitude, that they offer no more room for dissent than the modern GOP.

I was one of many people who found Jussie Smollett’s story a little off from the beginning. Two white men in ski masks are out in 10-degree weather in the middle of the night, equipped with a bottle of bleach or something like it and a rope that they fashioned into a mock noose. These thugs, who shouted Trump slogans as well as racist and homophobic slurs, seemed to know who Smollett was on sight, meaning they were aficionados of the splashy black soap opera Empire, on which Smollett is a main character. Somehow they were aware that Smollett, prominent but hardly on the A-list as celebrities go, was gay.

Yes, my skepticism made me feel a little guilty. We are justly sensitized to violence against people for being black and for being gay in the wake of incidents I need not name. We are also just past watching legions of people who should have known better refuse to credit Christine Blasey Ford’s accusation against Supreme Court Justice Brett Kavanaugh. Maybe fear and trauma distorted Smollett’s memory somewhat? Maybe the media were getting some of the details wrong? Wait and see, I and others thought.

Long ago, it could have required the president to meet certain requirements priorto unlocking this broad authority.

Who empowered President Donald Trump to declare that “a national emergency exists at the southern border of the United States”? Congress. Congress authorized such sweeping authority. Congress failed to impose meaningful constraints or define “national emergency.” Congress is failing to maintain accountability by abiding by its six-month mandatory reviews of such emergencies. And it is Congress that has the power to terminate Trump’s proclamation by a joint resolution of both chambers of Congress. According to recent reports, the House is going to introduce a joint resolution to do just that on Friday. The Senate would need to sign on. But since the president can veto this joint resolution, both chambers will need a two-thirds majority—an unlikely scenario in this political climate.

As winters grow warmer in North America, thirsty ticks are on the move.

We found the moose calf half an hour in. He lay atop thin snow on a gentle slope sheltered by the boughs of a big, black spruce, curled up as a dog would on a couch. He had turned his long, gaunt head to rest against his side and closed his eyes. He might have been sleeping. The day before, April 17, 2018, when the GPS tracker on the moose’s collar stopped moving for six hours, this stillness had caused both an email and a text to alert Jake Debow, a Vermont state field biologist who stood next to me now with Josh Blouin, another state biologist, that moose No. 75 had either shucked his collar or died.

“You want pictures before we start?” Debow asked me. He’s the senior of the two young biologists, both still in grad school, both in their late 20s, young and strong and funny, from families long in the north country, both drawn to the job by a love of hunting and being outside. Debow had always wanted to be a game warden; in college, he “fell in love with the science.” His Vermont roots go back 10 generations. “Jake Debow,” Josh told me, “is about as Vermont as you can get.” It was Debow’s second season on the moose project, and Blouin’s first. This was the sixth calf, of 30 collared, that they’d found sucked to death by ticks this season. They were here to necropsy the carcass, send the tissues to a veterinary pathology lab in New Hampshire, and try to figure out as much as possible about how and why these calves were dying.

The Bulwark is on a mission to name and shame President Trump’s most high-status supporters.

Charlie Sykes is sitting behind a desk in a sparse, disheveled office—blank walls lined with empty filing cabinets, windows covered with crooked blinds—as he tries to conjure the perfect metaphor for The Bulwark, the anti–Donald Trump conservative news site he recently helped start.

“We are the ultimate wilderness!” he declares to me.

But that doesn’t sound quite lonely enough for the political niche they’re occupying, so he tries again: “We’re on a desert island.”

Sykes continues to riff like this in his chirpy, midwestern accent, comparing The Bulwark’s writers to a band of “Somali pirates,” and then to a contingent of “guerrilla fighters.” He’s so enthusiastic about the exercise that before long I am tossing out my own overwrought suggestions. Perhaps, I muse at one point, they are soldiers on the final front of the Republican Civil War—making one last stand before the forces of Trumpism complete their conquest.

For several months, Cara has been working up the courage to approach her mom about what she saw on Instagram. Not long ago, the 11-year-old—who, like all the other kids in this story, is referred to by a pseudonym—discovered that her mom had been posting photos of her, without prior approval, for much of her life. “I’ve wanted to bring it up. It’s weird seeing myself up there, and sometimes there’s pics I don’t like of myself,” she said.

Like most other modern kids, Cara grew up immersed in social media. Facebook, Twitter, and YouTube were all founded before she was born; Instagram has been around since she was a toddler. While many kids may not yet have accounts themselves, their parents, schools, sports teams, and organizations have been curating an online presence for them since birth. The shock of realizing that details about your life—or, in some cases, an entire narrative of it—have been shared online without your consent or knowledge has become a pivotal experience in the lives of many young teens and tweens.

“Intuitive eating” encourages people to eat whatever they want. It might be great advice.

In 2016, Molly Bahr changed her whole life with a Google search. Bahr, a therapist, was at a professional training on eating disorders when a speaker mentioned in passing that participants might be interested in something called intuitive eating. Bahr looked up the term. “I went home that day, and it was like a light switch,” she says. “I felt like I got hit by a truck.”

Bahr decided she wanted to spread the word about intuitive eating, but there was one problem. Up to that moment, she had been dedicated to traditional ideas of dieting and health, encouraging followers on her growing fitness-focused Instagram account to weigh their food, watch their nutritional macros, and fret over their weight as a primary indicator of their health. Intuitive eating, on the other hand, is a theory that posits the opposite: Calorie-counting, carb-avoiding, and waistline-measuring are not only making people emotionally miserable, but contributing to many of the health problems previously attributed to simple over-eating.

A significant minority seldom or never meet people from another race, and they prize sameness, not difference.

Most Americans do not live in a totalizing bubble. They regularly encounter people of different races, ideologies, and religions. For the most part, they view these interactions as positive, or at least neutral.

Yet according to a new study by the Public Religion Research Institute (PRRI) and The Atlantic, a significant minority of Americans do not live this way. They seldom or never meet people of another race. They dislike interacting with people who don’t share their political beliefs. And when they imagine the life they want for their children, they prize sameness, not difference. Education and geography seemed to make a big difference in how people think about these issues, and in some cases, so did age.

Though it was clear long before this week’s hearings that there was serious fraud in the Ninth District, testimony produced a series of astonishing disclosures.

The decision came after a dramatic day, during a dramatic hearing, in a dramatic race. North Carolina election officials on Thursday ordered a new election in the state’s fraud-tainted Ninth Congressional District, the only 2018 U.S. House race that still doesn’t have a winner.

The contest between Republican Mark Harris and Democrat Dan McCready appeared to have been decided, albeit by a small margin, in Harris’s favor on election night. Now voters will remain without congressional representation until a new election can be held, following shocking revelations of a brazen scheme to break the law and swing the election using absentee ballots.

The hearing, originally scheduled to last one day, was well into its fourth when Harris abruptly called for a new election. “Through the testimony I’ve listened to over the past three days I believe a new election should be called,” he said. “It has become clear to me that the public’s confidence in the Ninth-District seat general election has been undermined to an extent that a new election is warranted.”

Can Roma nab Best Picture? Will A Star Is Born be snubbed? Here are The Atlantic’s predictions for the 91st Academy Awards.

However dramatic Sunday’s Academy Awards presentation might prove to be (safe prediction: not very), it will be all but impossible for the ceremony to match the turmoil of its run-up. Last summer, the Academy announced that it would add a new prize for “popular” film—a trulyterrible idea—only to reverse itself within a month. In December, days after being announced as the host, Kevin Hart stepped down after furor erupted over a series of nearly decade-old homophobic tweets and jokes. (Prepare yourselves: The last time the ceremony went without a host, in 1989, is widely considered the worst Oscars ever.) Then word came out that, to streamline the broadcast, the Academy would feature renditions of only two of the nominees for Best Original Song, and would present some significant technical awards, including Best Cinematography, during commercial breaks. Both plans were also quickly reversed.

The failed attempt to bring Amazon’s second headquarters to New York was a debacle, exposing a rift among progressives so large that it occupied half of last Sunday’s Meet the Press broadcast. When a local economic-development deal garners that kind of national press attention—when the head of the DNC is grilled about it by Chuck Todd—it is clear that this is about much more than local tax policy and a helipad.

I offered conditional support for Amazon’s arrival in New York when the deal was announced in November, while acknowledging the need to fix the deal’s problems. I was immediately labeled by the denizens of Twitter “a corporate shill,” “paid by Bezos,” or, my personal favorite, “a writer from Breitbart.” So convinced are some of my fellow progressives of their own rectitude, that they offer no more room for dissent than the modern GOP.

I was one of many people who found Jussie Smollett’s story a little off from the beginning. Two white men in ski masks are out in 10-degree weather in the middle of the night, equipped with a bottle of bleach or something like it and a rope that they fashioned into a mock noose. These thugs, who shouted Trump slogans as well as racist and homophobic slurs, seemed to know who Smollett was on sight, meaning they were aficionados of the splashy black soap opera Empire, on which Smollett is a main character. Somehow they were aware that Smollett, prominent but hardly on the A-list as celebrities go, was gay.

Yes, my skepticism made me feel a little guilty. We are justly sensitized to violence against people for being black and for being gay in the wake of incidents I need not name. We are also just past watching legions of people who should have known better refuse to credit Christine Blasey Ford’s accusation against Supreme Court Justice Brett Kavanaugh. Maybe fear and trauma distorted Smollett’s memory somewhat? Maybe the media were getting some of the details wrong? Wait and see, I and others thought.

Long ago, it could have required the president to meet certain requirements priorto unlocking this broad authority.

Who empowered President Donald Trump to declare that “a national emergency exists at the southern border of the United States”? Congress. Congress authorized such sweeping authority. Congress failed to impose meaningful constraints or define “national emergency.” Congress is failing to maintain accountability by abiding by its six-month mandatory reviews of such emergencies. And it is Congress that has the power to terminate Trump’s proclamation by a joint resolution of both chambers of Congress. According to recent reports, the House is going to introduce a joint resolution to do just that on Friday. The Senate would need to sign on. But since the president can veto this joint resolution, both chambers will need a two-thirds majority—an unlikely scenario in this political climate.